Escrow mistake hits borrower’s pocketbook

Is lender responsible for higher refi payment?
Published on Jul 26, 2004

"Recently we refinanced our home. After making payments for a few months, they raised our payment by $350. It seems that they underestimated our escrows...If we had known that our payment would be this high, we would not have refinanced. Do we have any recourse against the lender?" I'm not a lawyer but I doubt it. If the loan officer deliberately low-balled the escrow estimate to get you to sign, it would be fraud, but you could never prove it was not an innocent mistake. In all likelihood, it was an innocent mistake–one you should have caught. On numerous occasions, I have scolded borrowers who were "payment myopic," meaning that they made decisions based strictly on changes in the monthly mortgage payment. People suffering from payment myopia are capable of doing really dumb things, like refinancing into a higher-rate mortgage because a simultaneous extension of the term reduces the payment. Refinance decisions based on the mortgage payment plus the escrow payment take paym...